International comparisons

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Comparing Australia’s agricultural productivity performance with that of other countries is a useful way of understanding our international competiveness.

Agricultural productivity differences between countries reflect physical, climatic, geographic, economic and policy differences. These factors determine the inherent suitability of a country for agricultural production and have a strong influence on the structure of agricultural industries.

In addition, capacity for R&D and innovation, magnitude of capital investment and flexibility to reallocate resources over time all contribute to differences in productivity levels and growth rates across countries.

ABARES research shows that Australian agricultural productivity remains below that of Canada and the United States in level terms —but also that our productivity has grown has improved relative to Canada.

Australia has maintained its relative productivity position with these competitors despite challenges such as greater climate variability, remoteness from global markets and a smaller capacity for rural R&D.

Agricultural TFP levels: Australia, Canada and the United States, 1961 to 2006

Source: Sheng, Nossal and Ball 2013

The technology responsible for past productivity growth in Australian agriculture is now widely accessible in emerging and developing countries. Over time, adoption of this technology will allow farmers in these countries to ‘catch up’ from a lower productivity base. Work by the USDA shows that countries such as Brazil and China have experienced rapid productivity growth, from a lower base, over the past few decades. Farmers from these countries are therefore becoming increasingly competitive in international markets because they are able to profitably sell their products for a lower price.